Fumiyuki Nakanishi, head of investment at SMBC Friend Securities in Tokyo, said: "I think Fukuda's resignation is negative for the stock market. It seems the process of selecting his successor, no matter who is chosen, will likely create discord among his party. Political confusion is a negative factor."

Naoki Ilzuka, senior economist at Mizuho Securities, said: "Markets will wonder why he is quitting, and why now. This sudden resignation will be a negative surprise. This may prompt Japan selling."

However, Philip Whittome, Japan fund manager at Investec Asset Management, said: "It won't make a significant difference. The stock market has been reacting to things more internationally."